Big row over new currencies

Though it has been upstaged by the ongoing IFC loan controversy, the recent decision by the Bank of Ghana to introduce 10,000 and 20,000 cedi-carries enough ammunition ready to bombard the Kufuor government.

Since the government declared its intention to introduce the new currencies it continues to generate debate about the economic priorities of the NPP government. To back its decision the Bank of Ghana argues that the larger denominations would curb the use of bulky sums of money in business transactions. The deal is expected to cost government about ?10 million (100 billion cedis). However, some economic analysts have questioned the decision, pointing out that in the avalanche of pressing economic issues facing the country, printing new higher currencies should not be a priority to the government.

In 1998 when it was reported that the NDC government had printed ?10,000 members of the public roundly condemned the decision, compelling the government to withhold plans to introduce them into the system. Vitus Azeem of the Centre for Budget Analysis (CBA) of the Integrated Social Development Centre (ISODEC) says the BoG?s decision is imprudent.

?I do not think it is a priority,? Azeem said in an interview with Public Agenda. He also warned that the printing of large denominations could trigger another round of inflation, which this very government is struggling to contain Azeem said options such as the use of more Automated Teller Machines (ATM) and travellers? cheques should have been considered, if the government thought the lower currencies were becoming a disincentive to the business community. Azeem expressed concern about government?s apparent over-reliance on foreign loans, including the latest one from the International Finance Consortium, which has raised eye brows. Though he felt the National Democratic Congress rushed to the press on the IFC loan, he stressed that all such loans should go into social services or they should be put into ventures that will allow government to pay back the loans.

The CBA analyst also called on the Finance Minister to present his mid-year budget review since the year is half-way through. ?We expect him to come and tell us how the economy is doing with facts and figures,? he said.

Meanwhile the printing of the new currencies, which will be introduced by the close of this year, appear to run into problems. Some newspaper reports recently suggested that the tendering process for the award of the contract for the printing was not transparent and irregular. They also complained about the contract sum being stated in pounds sterling instead of dollars, which they argued gave an undue advantage to one of the bidders, De La Rue.